Friday Suggestions: The “Housing Crashes” Version
Arrr ya prepared, Nice Ones!
Aye! Aye! Mr. Nice Stuff!
Oooh! Who lives in Kentucky out in BFE?
Mr. Nice Stuff!
Absorbent and yellow and porous is he!
Mr. … wait, you get us with this each time!
Yeah, and I nonetheless suppose it’s humorous.
Y’all know what in the present day is: It’s Friday Suggestions!
In the present day’s the day we douse ourselves in honey and dive into the Nice Stuff e-mail “bag” … and reply all the pieces that sticks.
In order that’s what you do for enjoyable in Kentucky?
I don’t know that anybody does this in Kentucky for sure, but it surely wouldn’t shock me. I imply, it’s Kentucky. Anywho, that’s inappropriate … ya freaks.
In case you’ve received a query concerning the inventory market, investing, choices buying and selling, bonds, analyst scores, you identify it … we’ve received a solution and we’re simply itching to share it with you. Sure, that’s what that itching is … and also you’ll not persuade me in any other case.
Even when it’s not market-related, we’ll nonetheless reply again. I imply, we talked about Spam final week with Nice One Dick Okay. Your query can’t be as unusual as that dialog … belief me.
So drop us a line at GreatStuffToday@BanyanHill.com and assist us show you how to! Or one thing inspirational like that.
And now, with none additional ado … right here’s our featured presentation:
April numbers for the housing market had been launched and the U.S. new houses gross sales hit a two-year low, in addition to the costs on houses surging. Is the housing bubble about to burst and the housing market able to crash?
— Todd B.
Why, hellooo there, Todd! Thanks for writing in!
Now, Todd … I do know you wrote in to assist promote one other monetary publication, and I simply need you to know — in case you’re really studying this — that we’re contemplating issues. You know the way these items go. I can’t simply push an unknown analyst with out due diligence. So, that’s what we’re doing.
That mentioned, your opening query was simply too good to move up. In response, properly … we’ll do it Dwell:
Housing crashes, a brand new house owner cries.
His fairness falls to the ground.
Angel traders open their eyes.
The confusion units in … earlier than the Fed may even shut the door.
Housing crashes, and residential costs die.
Demand falls to the ground.
Owners shut their eyes.
The confusion was Wall Road’s.
It belongs now, to the employees down the corridor…
Todd, I can really feel it coming again once more. Like 2007, we’re chasing the wind. Forces are pulling from the middle of the Federal Reserve. I can really feel it…
In reality, I’ve warned y’all for the previous yr that this was coming. That the present housing market was unsustainable. I imply, the surge in house costs was unsustainable because it was with inflation hovering and simple cash and incentives all over the place.
However then you definately throw in hedge funds, main Wall Road traders and publicly traded firms shopping for up homes left and proper?
Y’all needed to have recognized this was coming. I knew it was coming.
As Todd said, the U.S. Commerce Division reported this week that April new house gross sales plummeted 16.6%. On a year-over-year foundation, new house gross sales had been down practically 27%!
Now, earlier than a few of y’all curse the Fed for elevating rates of interest … this was the fourth straight month-to-month decline in house gross sales.
In different phrases, the Fed didn’t begin the hearth. It was already burning because the cash presses had been churning. What’s extra, the housing market is nonetheless hampered by provide chain points.
As an illustration, the variety of stalled new house building tasks jumped 47% in April — even supposing constructing permits and authorizations proceed to rise.
In different phrases, even when the price of financing a house wasn’t going up … the value of mentioned house would nonetheless rise as a result of constructing a house proper now could be only a logistical nightmare in lots of elements of the U.S.
However most likely the most important warning signal that the housing market is on its final legs is that house costs are nonetheless hovering … regardless of the Federal Reserve climbing rates of interest and sending mortgage charges to their highest ranges in a long time.
In reality, house costs jumped 19.6% yr over yr in April though demand dropped. That’s not a superb signal in any respect. Nope.
So, Todd … is the housing bubble about to burst? And can the housing market crash?
I’d say the bubble has already burst. I feel Wall Road is aware of it. Proper now, we’re simply ready on the opposite shoe to drop earlier than issues get ugly.
This time, let’s hope each single lender on the planet isn’t leveraged as much as their eyeballs. You already know … so we don’t have one other Lehman second.
Thanks once more for writing in, Todd!
Dangerous Information Bears?
Spots are filling up quick to Mike Carr’s LIVE reveal of the Greed Gauge on Could 31.
And it’s no surprise — in any case, Mike has created a brand-new means to have a look at concern available in the market.
It blows CNBC’s favourite sentiment indicator out of the water … outperformed the S&P by 3-to-1 over the previous 20 years…
And in the present day, Mike’s Greed Gauge is flashing a essential purchase sign for the inventory market.
In case you’re bearish proper now … be taught extra concerning the Greed Gauge proper right here.
Nicely, that was … cheery?
I actually want I had higher market information for y’all. However to cite Eric Draven from The Crow: “It will possibly’t rain on a regular basis.”
Nonetheless, I’ve determined to take a extra Jimmy Buffett outlook on issues: “If we weren’t all loopy, we’d go insane.” Now I simply want to seek out my misplaced shaker of salt…
Within the meantime, let’s see what else is within the ol’ mailbag in the present day:
Meow Meow Beans
Expensive Mr. Nice Stuff:
As I learn final night time’s challenge concerning the brand new Coinbase worker ranking system, all I may consider was the Meow Meow Beanz episode of Neighborhood. I figured you might be at all times on with obscure references, so I’m stunned you missed that chance. In case you haven’t seen it, it’s value a stream because it’s an amazing stoopidly humorous episode that highlights the ridiculosity and absurdity of this world we stay in. Sustain the Nice work!
— Daniel M.
Thanks for writing in, Daniel!
I hate to say this, however I by no means actually received into Neighborhood. After this reference, nonetheless, I feel I’m required so as to add it to my watch checklist.
Nonetheless, I feel the Black Mirror episode “Nosedive” encapsulates the shear idiocy of this concept fairly properly … at the very least from my perspective. I discover this concept notably terrifying.
Judging from the sheer variety of Nice Ones who wrote in on this subject, a lot of you’re feeling the identical means. Right here’s a fast abstract:
We’ve received Daniel, having a superb giggle on the concept of ranking workers.
We’ve received Dan G., who identified that this may doubtless enhance office harassment and hostility.
We’ve received Tim P., who, as a 45-plus-year enterprise proprietor, thinks that anybody implementing this concept is “so silly and clueless.”
And we’ve received Jack T., who factors out that this may very well be used to focus on people who find themselves not sociably widespread and/or put on “objectionable garments.”
Jack really hits on a serious concern of mine. Y’all know this sort of ranking wouldn’t cease at garments … and since it is a monetary publication, that’s all I’m gonna say about that.
I imply, the thought is so dangerous that I’m actively reconsidering whether or not to maintain Coinbase (Nasdaq: COIN) within the Nice Stuff Picks portfolio over this level alone … and we haven’t even touched on the entire NFT factor Coinbase is pushing laborious.
In case you learn my Coinbase commentary that sparked all of this madness, you’ll know I’ve marked COIN inventory as a maintain. I’ll have extra on whether or not or to not promote quickly…
Thanks once more for writing in, Daniel!
Let’s Do The Time Bomb Once more
Personally, I believed Telsa was a extremely nice concept as a result of I appreciated Nikola. Elon is a genius in his personal proper. The issue with profitable geniuses is that they change into enamored with their very own press. It was the downfall of Nikola and can be Elon’s.
The valuation of Tesla the automotive maker in accordance with the inventory market was equal to or higher GM, Ford and the corporate formally referred to as Chrysler mixed. It actually didn’t appear potential. The worth of Tesla was rested on Elon’s shoulders, and he carried it for a few years.
He believed the press when it mentioned if he touched it could flip to gold, this time the result’s going to be the identical as his latest tweet, a turd. No, I didn’t put money into the golden baby.
My cash rests with Charles Mizrahi’s steering.
— Dan G.
Whats up once more, Dan! You’ve been fairly talkative these days … thanks!
So I’m gonna depart apart my private opinion of Elon Musk … however largely as a result of I don’t suppose he’s a genius. Some huge cash and just a little foresight go a good distance within the tech world.
Anywho, we obtained practically as many emails about Tesla (Nasdaq: TSLA) and Elon Musk as we did about Coinbase’s worker ranking system … if that tells you something. I’ve at all times had hassle with Tesla’s valuation, for precisely the rationale you state.
Tesla ought to not be value greater than Volkswagen, Ford, Basic Motors and Toyota mixed. It’s simply idiocy. It’s why I by no means beneficial TSLA inventory in Nice Stuff Picks.
Sure, I perceive that Tesla is extra than simply electrical autos (EVs). It has photo voltaic panels and energy partitions and battery tech and AI. I get it. All of these issues add as much as supposedly justify Tesla’s Wall Road valuation.
My downside with all of these issues is that Tesla isn’t a market chief in any of them. There are higher batterymakers. There are higher solar energy investments. There are higher AI investments. Heck, there are even higher EV makers.
Briefly, Tesla has no moat. No barrier to competitors — aside from the capital wanted to get began. No proprietary expertise that simply blows away the competitors.
However Tesla has one essential, very essential factor in its favor: first-mover standing.
Proper now, Tesla is like Netflix (Nasdaq: NFLX) was previous to the pandemic. It believed so closely in its personal dominance that it didn’t take into consideration the rising competitors.
Tesla is repeating that very same mistake proper now. As soon as Volkswagen, Ford, Basic Motors and the remainder begin getting critical about EVs … it’s sport over.
Now, I don’t suppose Tesla goes to break down or exit of enterprise or something. However I do consider it should change into one other large automaker … and its inventory will act accordingly.
On a closing observe, Dan, I like that you simply referred to as out my colleague Charles Mizrahi. Charles is a no-nonsense investor. He doesn’t put up with stuff like ridiculous Tesla valuations, and, as such, he’s most likely probably the greatest — if not the greatest — guru that will help you navigate the present market madness.
Want extra proof? Simply hear … er, learn … Charles’s ideas on the present EV battery market:
For EVs, the tipping level — affordability — might lastly be arriving, due to a brand-new battery expertise.
As quickly as they change into inexpensive, demand will increase, and gross sales soar. Now … this beautiful new expertise is about to chop the price of EV batteries IN HALF. Which means by subsequent yr, an EV is anticipated to price the identical as a gas-powered automotive.
To find the corporate behind this new expertise, click on right here now.
Mr. Nice Stuff,
As a resident of Maui, I can verify that SPAM is certainly a very talked-about meat dish within the Hawaiian Islands. In reality, SPAM is extra widespread than inexperienced eggs and ham. Nonetheless, being a California transplant and a religious Pescatarian, I’m no fan of SPAM, both.
Having mentioned that, my teenage son was born in Hawaii (and therefore, a Native Hawaiian) and he goes completely nuts for Musubi, thereby undeniably confirming SPAM’s reputation within the islands. With out query, the gelatinous pink canned meat is a giant time delicacy right here and my son is just not one to be duped by intelligent branding.
What’s Musubi you ask? Nicely, I’ll inform you Mister, it’s primarily SPAM sushi. I’ve included a photograph as I’m guessing the idea of spam sushi has most likely rendered you in a state of disbelieve and/or are questioning my or the world’s sanity.
— Scott L.
I like my job due to moments like this.
Thanks, Scott! You’ve confirmed one thing I’ve questioned about for a very long time.
Additionally, I like sushi … which is unlucky while you stay in the midst of nowhere, Kentucky. Not a lot sushi ‘spherical these right here elements. It’s simply tacos, McDonald’s and Applebee’s so far as the attention can see.
However Spam sushi? Attention-grabbing. I’d attempt that after. I’ve tried worse … y’all ever been duped into consuming Rocky Mountain oysters? Tried scrapple? Or braunschweiger?
I feel that’s all for in the present day’s Friday Suggestions. Ugh … now I would like some Tums.
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Editor, Nice Stuff